When introducing a person to Bitcoin, it is always emphasized that this is a completely new form of currency, distinct from traditional paper money. This distinction is directly related to the emergence of Bitcoin. Satoshi Nakamoto, dissatisfied with the excessive issuance of currency by central banks during the 2008 financial crisis, deliberately fixed the total amount of bitcoins using technical means.
The total volume of bitcoins is maintained at a constant level through a sequential process known as halving. The halving mechanism, which is considered the most important technical feature of Bitcoin, makes this currency deflationary and scarce. Moreover, this mechanism has been adopted by many altcoins and has become one of the key measures to curb inflation in many cryptocurrencies.@Cryptoland_8
What is Bitcoin halving?
As we all know, a new Bitcoin block is mined every ten minutes, and miners compete in calculations to gain the right to record transactions. If successful, they receive a block reward. Initially, the reward was 50 $BTC per block, but this amount is not fixed. Satoshi Nakamoto established a rule in the protocol that the block reward would be halved every 210,000 blocks (approximately every 4 years). This process, occurring every 4 years, is known as the halving mechanism. Due to such proportional reduction, the total number of bitcoins is limited to 21 million, making it impossible to issue additional coins.
In the past, Bitcoin has gone through three halvings. After the first halving in 2012, the block reward decreased to 25 #BTC , in 2016 it decreased to 12.5 BTC, and in 2020 it decreased to 6.25 BTC, which is the current reward for mining a block. In the upcoming 2024, as a result of the fourth halving, the block reward will decrease to 3.125 BTC.$BNB
Why is the Bitcoin halving so important?
The halving mechanism is often praised for ensuring that bitcoins have a limited supply without the possibility of arbitrary increase, similar to precious metals like gold. When demand for Bitcoin rises, the relationship between supply and demand directly affects the market value of Bitcoin, making it the most profitable investment product over the last decade.
Furthermore, regular halving over time increases Bitcoin's scarcity, allowing early miners and investors to receive higher rewards, which ultimately stimulates early participation. This rational mechanism of incremental incentives motivates miners and investors to enthusiastically join the project at early stages.$YFI
Available data indicate that investors have embraced the halving mechanism. After the first halving in 2012, the price of Bitcoin soared 80 times; during the second halving in 2016, the price tripled; and the third halving in 2020 similarly led to a tripling of the price.#HalvingUpdate
Therefore, halving is often regarded as the most important technological feature of Bitcoin. This simple yet brilliant economic model has led to a consensus: Bitcoin is deflationary, scarce, resilient, and has significant potential value. The upcoming fourth halving in 2024 is set to be one of the most significant events for Bitcoin miners and investors in the next six months.#HALVİNG
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